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Hrblockfree com Publication 80 - Main Content Table of Contents Introduction 1. Hrblockfree com Employer Identification Number (EIN) 2. Hrblockfree com Who Are Employees?Tests. Hrblockfree com Business Owned and Operated by Spouses Farm Crew Leaders 3. Hrblockfree com Employee's Social Security Number (SSN)Registering for SSNVS. Hrblockfree com 4. Hrblockfree com Wages and Other CompensationFringe Benefits 5. Hrblockfree com TipsOrdering rule. Hrblockfree com 6. Hrblockfree com Social Security and Medicare Taxes for FarmworkersThe $150 Test or the $2,500 Test 7. Hrblockfree com How To Figure Social Security and Medicare TaxesHousehold and agricultural employers. Hrblockfree com 8. Hrblockfree com Depositing TaxesPayment with Return When To Deposit How To Deposit Deposit Penalties 9. Hrblockfree com Employer's ReturnsReporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Prior Period Adjustments 10. Hrblockfree com Wage and Tax StatementsWaiver. Hrblockfree com 11. Hrblockfree com Federal Unemployment (FUTA) Tax—U. Hrblockfree com S. Hrblockfree com Virgin Islands Employers Only How To Get Tax Help Introduction This publication is for employers whose principal place of business is in the U. Hrblockfree com S. Hrblockfree com Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands, or who have employees who are subject to income tax withholding for any of these jurisdictions. Hrblockfree com Employers and employees in these areas are generally subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA). Hrblockfree com See section 6 and section 7 for more information. Hrblockfree com This publication summarizes employer responsibilities to collect, pay, and report these taxes. Hrblockfree com Whenever the term “United States” is used in this publication, it includes U. Hrblockfree com S. Hrblockfree com Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. Hrblockfree com This publication also provides employers in the U. Hrblockfree com S. Hrblockfree com Virgin Islands with a summary of their responsibilities in connection with the tax under the Federal Unemployment Tax Act, known as FUTA tax. Hrblockfree com See section 11 for more information. Hrblockfree com Except as shown in the table in section 12, social security, Medicare, and FUTA taxes apply to every employer who pays taxable wages to employees or who has employees who report tips. Hrblockfree com This publication does not include information relating to the self-employment tax (for social security and Medicare of self-employed persons). Hrblockfree com See Publication 570, Tax Guide for Individuals With Income From U. Hrblockfree com S. Hrblockfree com Possessions, if you need this information. Hrblockfree com This publication also does not include information relating to income tax withholding. Hrblockfree com In U. Hrblockfree com S. Hrblockfree com Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, contact your local tax department for information about income tax withholding. Hrblockfree com See Publication 15 (Circular E), for information on U. Hrblockfree com S. Hrblockfree com federal income tax withholding. Hrblockfree com Comments and suggestions. Hrblockfree com   We welcome your comments about this publication and your suggestions for future editions. Hrblockfree com   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Hrblockfree com NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Hrblockfree com Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Hrblockfree com    You can also send us comments from www. Hrblockfree com irs. Hrblockfree com gov/formspubs. Hrblockfree com Click on More Information and then click on Comment on Tax Forms and Publications. Hrblockfree com   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. Hrblockfree com 1. Hrblockfree com Employer Identification Number (EIN) An employer identification number (EIN) is a nine-digit number that the IRS issues. Hrblockfree com Its format is 00-0000000. Hrblockfree com It is used to identify the tax accounts of employers and certain other organizations and entities that have no employees. Hrblockfree com Use your EIN on all of the items that you send to the IRS and SSA for your business. Hrblockfree com If you do not have an EIN, you may apply for one online. Hrblockfree com Go to IRS. Hrblockfree com gov and click on the Apply for an EIN Online link under Tools. Hrblockfree com You may also apply for an EIN by calling 1-800-829-4933, (U. Hrblockfree com S. Hrblockfree com Virgin Islands only) or 267-941-1099 (toll call), or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Hrblockfree com Do not use a social security number (SSN) in place of an EIN. Hrblockfree com If you do not have an EIN by the time a return is due, file a paper return and enter “Applied For” and the date that you applied for it in the space shown for the number. Hrblockfree com If you took over another employer's business, do not use that employer's EIN. Hrblockfree com You should have only one EIN. Hrblockfree com If you have more than one, write to the IRS office where you file your returns using the “without a payment” address in the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943. Hrblockfree com Or call the IRS Business & Specialty Tax Line at 1-800-829-4933 (U. Hrblockfree com S. Hrblockfree com Virgin Islands only) or 267-941-1000 (toll call). Hrblockfree com Persons who are deaf, hard of hearing, or have a speech disability (TDD/TTY users) in the U. Hrblockfree com S. Hrblockfree com Virgin Islands may call 1-800-829-4059. Hrblockfree com The IRS will tell you which EIN to use. Hrblockfree com For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN, or Publication 583, Starting a Business and Keeping Records. Hrblockfree com 2. Hrblockfree com Who Are Employees? Generally, employees are defined either under common law or under special statutes for certain situations. Hrblockfree com See Publication 15-A, Employer's Supplemental Tax Guide, for details on statutory employees and nonemployees. Hrblockfree com Employee status under common law. Hrblockfree com   Generally, a worker who performs services for you is your employee if you can control what will be done and how it will be done. Hrblockfree com This is so even when you give the employee freedom of action. Hrblockfree com What matters is that you have the right to control the details of how the services are performed. Hrblockfree com See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. Hrblockfree com    Generally, people in business for themselves are not employees. Hrblockfree com For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. Hrblockfree com However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. Hrblockfree com   If an employer-employee relationship exists, it does not matter what it is called. Hrblockfree com The employee may be called an agent or independent contractor. Hrblockfree com It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. Hrblockfree com Statutory employees. Hrblockfree com   There are also some special definitions of employees for social security, Medicare, and FUTA taxes. Hrblockfree com   While the following persons may not be common law employees, they are considered employees for social security and Medicare purposes if the conditions under Tests , discussed later, are met. Hrblockfree com a. Hrblockfree com   An agent (or commission) driver who delivers food or beverages (other than milk) or picks up and delivers laundry or dry cleaning for someone else. Hrblockfree com b. Hrblockfree com   A full-time life insurance salesperson who sells primarily for one company. Hrblockfree com c. Hrblockfree com   A homeworker who works by the guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. Hrblockfree com d. Hrblockfree com   A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. Hrblockfree com The orders must be for merchandise for resale or supplies for use in the customer's business. Hrblockfree com The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. Hrblockfree com Tests. Hrblockfree com   Withhold social security and Medicare taxes from statutory employees' wages if all three of the following tests apply. Hrblockfree com The service contract states or implies that almost all of the services are to be performed personally by them. Hrblockfree com They have little or no investment in the equipment and property used to perform the services (other than an investment in transportation facilities). Hrblockfree com The services are performed on a continuing basis for the same payer. Hrblockfree com Persons in a or d, earlier, are also employees for FUTA tax purposes if tests 1 through 3 are met (U. Hrblockfree com S. Hrblockfree com Virgin Islands only). Hrblockfree com   Publication 15-A gives examples of the employer-employee relationship. Hrblockfree com Statutory nonemployees. Hrblockfree com   Certain direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. Hrblockfree com They are generally treated as self-employed for employment tax purposes. Hrblockfree com See Publication 15-A for details. Hrblockfree com H-2A agricultural workers. Hrblockfree com   On Form W-2, do not check box 13 (Statutory employee) as H-2A workers are not statutory employees. Hrblockfree com Treating employees as nonemployees. Hrblockfree com   If you incorrectly treated an employee as a nonemployee and did not withhold social security and Medicare taxes, you will be liable for the taxes. Hrblockfree com See Treating employees as nonemployees in section 2 of Publication 15 (Circular E), for details on Internal Revenue Code section 3509, which may apply. Hrblockfree com IRS help. Hrblockfree com   If you want the IRS to determine if a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Hrblockfree com Voluntary Classification Settlement Program (VCSP). Hrblockfree com   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. Hrblockfree com To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). Hrblockfree com For more information, visit IRS. Hrblockfree com gov and enter “VCSP” in the search box. Hrblockfree com Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Hrblockfree com See Publication 541, Partnerships, for more details. Hrblockfree com The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. Hrblockfree com Exception—Qualified Joint Venture. Hrblockfree com   If you and your spouse materially participate as the only members of a jointly owned and operated business, and you file a joint Form 1040, U. Hrblockfree com S. Hrblockfree com Individual Income Tax Return, or joint Form 1040-SS, U. Hrblockfree com S. Hrblockfree com Self-Employment Tax Return—U. Hrblockfree com S. Hrblockfree com Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or Puerto Rico, you can make a joint election to be taxed as a qualified joint venture instead of a partnership. Hrblockfree com See the Instructions for Schedule C (Form 1040) or the Instructions for Form 1040-SS. Hrblockfree com Spouses electing qualified joint venture status are treated as sole proprietors for federal tax purposes. Hrblockfree com Either of the sole proprietor spouses may report and pay the employment taxes due on wages paid to the employees, using the EIN of that spouse’s sole proprietorship. Hrblockfree com For more information on qualified joint ventures, visit IRS. Hrblockfree com gov and enter “qualified joint venture” in the search box. Hrblockfree com Farm Crew Leaders You are an employer of farmworkers if you are a crew leader. Hrblockfree com A crew leader is a person who furnishes and pays (either on his or her own behalf or on behalf of the farm operator) workers to do farmwork for the farm operator. Hrblockfree com If there is no written agreement between you and the farm operator stating that you are his or her employee, and if you pay the workers (either for yourself or for the farm operator), then you are a crew leader. Hrblockfree com 3. Hrblockfree com Employee's Social Security Number (SSN) An employee's social security number (SSN) consists of nine digits separated as follows: 000-00-0000. Hrblockfree com You must get each employee's name and SSN and enter them on Form W-2AS, W-2CM, W-2GU, or W-2VI. Hrblockfree com If you do not report the employee's correct name and SSN, you may owe a penalty unless you have reasonable cause. Hrblockfree com See Publication 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. Hrblockfree com Employee's social security card. Hrblockfree com   You should ask the employee to show you his or her social security card. Hrblockfree com The employee may show the card if it is available. Hrblockfree com Do not accept a social security card that says “Not valid for employment. Hrblockfree com ” A social security number issued with this legend does not permit employment. Hrblockfree com You may, but you are not required to, photocopy the social security card if the employee provides it. Hrblockfree com If an employee does not have a social security card or needs a new one, the employee should apply for one on Form SS-5 and submit the necessary documentation. Hrblockfree com The employee must complete and sign Form SS-5; it cannot be filed by the employer. Hrblockfree com You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. Hrblockfree com If your employee has applied for an SSN but has not received the card before you must file your Form W-2 reports, and you are filing your reports on paper, enter “Applied For” in box d. Hrblockfree com Enter all zeroes in the SSN field if filing electronically. Hrblockfree com When the employee receives the SSN, file Copy A of Form W-2c with SSA to show the employee's SSN. Hrblockfree com Correctly record the employee's name and SSN. Hrblockfree com   Record the name and number of each employee as they appear on his or her social security card. Hrblockfree com If the name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. Hrblockfree com Continue to use the old name until the employee shows you the replacement social security card with the corrected name. Hrblockfree com   If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported on the most recently filed Form W-2AS, W-2CM, W-2GU, or W-2VI. Hrblockfree com It is not necessary to correct other years if the previous name and SSN were used for years before the most recent Form W-2. Hrblockfree com Where to get and file social security number application forms. Hrblockfree com    U. Hrblockfree com S. Hrblockfree com Virgin Islands—U. Hrblockfree com S. Hrblockfree com Social Security Administration, 8000 Nisky Center, First Floor, Suite 2, St. Hrblockfree com Thomas, VI 00802. Hrblockfree com  Guam—U. Hrblockfree com S. Hrblockfree com Social Security Administration, 655 Harmon Loop Road, Suite 300, Dededo, GU 96929. Hrblockfree com  American Samoa—U. Hrblockfree com S. Hrblockfree com Social Security Administration, Pago Plaza, Suite 117, Pago Pago, AS 96799. Hrblockfree com  Commonwealth of the Northern Mariana Islands—U. Hrblockfree com S. Hrblockfree com Social Security Administration, MH Building, Suite 201, Saipan, MP 96950. Hrblockfree com Verification of social security numbers. Hrblockfree com   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. Hrblockfree com Visit www. Hrblockfree com socialsecurity. Hrblockfree com gov/employer/ssnv. Hrblockfree com htm for more information. Hrblockfree com Registering for SSNVS. Hrblockfree com   You must register online and receive authorization from your employer to use SSNVS. Hrblockfree com To register, visit SSA's website at www. Hrblockfree com ssa. Hrblockfree com gov/employer and click on the Business Services Online link. Hrblockfree com Follow the registration instructions to obtain a user identification (ID) and password. Hrblockfree com You will need to provide the following information about yourself and your company. Hrblockfree com Name. Hrblockfree com SSN. Hrblockfree com Date of birth. Hrblockfree com Type of employer. Hrblockfree com EIN. Hrblockfree com Company name, address, and telephone number. Hrblockfree com Email address. Hrblockfree com   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. Hrblockfree com You must enter the activation code online to use SSNVS. Hrblockfree com 4. Hrblockfree com Wages and Other Compensation Generally, all wages are subject to social security and Medicare tax (and FUTA tax for U. Hrblockfree com S. Hrblockfree com Virgin Islands employers). Hrblockfree com However, wages subject to social security tax and FUTA tax are limited by a wage base amount that you pay to each employee for the year. Hrblockfree com The wage base for social security tax is $117,000 for 2014. Hrblockfree com After you pay $117,000 to an employee in 2014, including tips, do not withhold social security tax on any amount that you later pay to the employee for the year. Hrblockfree com The wage base for FUTA tax is $7,000 for 2014. Hrblockfree com All wages are subject to Medicare tax. Hrblockfree com The wages may be in cash or in other forms, such as an automobile for personal use. Hrblockfree com Wages include salaries, vacation allowances, bonuses, commissions, and fringe benefits. Hrblockfree com It does not matter how payments are measured or paid. Hrblockfree com See the table in section 12 for exceptions to social security, Medicare, and FUTA taxes on wages. Hrblockfree com See section 5 and section 6 for a discussion of how the rules apply to tips and farmworkers. Hrblockfree com Social security and Medicare taxes apply to most payments of sick pay, including payments by third parties such as insurance companies. Hrblockfree com Special rules apply to the reporting of third-party sick pay. Hrblockfree com For details, see Publication 15-A. Hrblockfree com Determine the value of noncash pay (such as goods, lodging, and meals) by its fair market value. Hrblockfree com However, see Fringe Benefits , later in this section. Hrblockfree com Except for farmworkers and household employees, this kind of pay may be subject to social security, Medicare, and FUTA taxes. Hrblockfree com Back pay, including retroactive wage increases (but not amounts paid as liquidated damages), is taxed as ordinary wages in the year paid. Hrblockfree com For information on reporting back pay to the Social Security Administration, see Publication 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration. Hrblockfree com Travel and business expenses. Hrblockfree com   Payments to your employee for travel and other necessary expenses of your business generally are included in taxable wages if (a) your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, or (b) you advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount that he or she does not substantiate. Hrblockfree com Sick pay. Hrblockfree com   In general, sick pay is any amount that you pay, under a plan that you take part in, to an employee because of sickness or injury. Hrblockfree com These amounts are sometimes paid by a third party, such as an insurance company. Hrblockfree com In either case, these payments are subject to social security and Medicare taxes (and FUTA tax for U. Hrblockfree com S. Hrblockfree com Virgin Islands employers). Hrblockfree com Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. Hrblockfree com Publication 15-A explains the employment tax rules that apply to sick pay, disability benefits, and similar payments to employees. Hrblockfree com Fringe Benefits Generally, fringe benefits are includible in the gross income of an employee and are subject to employment taxes. Hrblockfree com Examples of fringe benefits include the use of an automobile, aircraft flights that you provide, free or discounted commercial airline flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. Hrblockfree com In general, the amount included in the employee's income is the excess of the fair market value of the benefit over the sum of any amount paid for it by the employee and any amount excluded by law. Hrblockfree com For more information, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Hrblockfree com When fringe benefits are treated as paid. Hrblockfree com   You can choose to treat certain noncash fringe benefits (including personal use of an automobile provided by you) as paid by the pay period, quarter, or on any other basis that you choose, but they must be treated as paid at least annually. Hrblockfree com You do not have to make a formal choice of payment dates or notify the IRS. Hrblockfree com You do not have to use the same basis for all employees. Hrblockfree com You may change methods as often as you like, as long as all benefits provided in a calendar year are treated as paid no later than December 31 of the calendar year. Hrblockfree com However, see Special accounting rule for fringe benefits provided during November and December , later in this section. Hrblockfree com   You can treat the value of a single taxable noncash fringe benefit as paid on one or more dates in the same calendar year, even if the employee gets the entire benefit at one time. Hrblockfree com However, once you elect the payment dates, you must report the taxes on your return in the same tax period in which you treated them as paid. Hrblockfree com This election does not apply to a fringe benefit where real property or investment personal property is transferred. Hrblockfree com Withholding social security and Medicare taxes on fringe benefits. Hrblockfree com   You add the value of fringe benefits to regular wages for a payroll period and figure social security and Medicare taxes on the total. Hrblockfree com   If you withhold less than the required amount of social security and Medicare taxes from the employee in a calendar year but report and pay the proper amount, you may recover the taxes from the employee. Hrblockfree com Depositing taxes on fringe benefits. Hrblockfree com   Once you choose payment dates for taxable noncash fringe benefits, you must deposit taxes in the same deposit period that you treat the fringe benefits as paid. Hrblockfree com You may make a reasonable estimate of the value of the fringe benefits. Hrblockfree com In general, the value of taxable noncash fringe benefits provided in a calendar year must be determined by January 31 of the following year. Hrblockfree com   You may claim a refund of overpayments or elect to have any overpayment applied to the next employment tax return. Hrblockfree com If deposits are underpaid, see Deposit Penalties in section 8. Hrblockfree com Valuation of vehicles provided to employees. Hrblockfree com    If you provide a vehicle to your employees, you may either determine the actual value of the benefit for the entire calendar year, taking into account the business use of the vehicle, or consider the entire use for the calendar year as personal and include 100% of the value of the vehicle in the employee's income. Hrblockfree com For reporting information to employees, see the box 14 instructions in the General Instructions for Forms W-2 and W-3. Hrblockfree com Special accounting rule for fringe benefits provided during November and December. Hrblockfree com   You may choose to treat the value of taxable noncash fringe benefits provided during November and December as paid in the next year. Hrblockfree com However, this applies only to those benefits that you actually provided during November and December, not to those you merely treated as paid during those months. Hrblockfree com   If you use this rule, you must notify each affected employee between the time of the employee's last paycheck of the calendar year and at or near the time that you give the employee Form W-2AS, W-2CM, W-2GU, or W-2VI. Hrblockfree com If you use the special accounting rule, your employee must also use it for the same period that you use it. Hrblockfree com You cannot use this rule for a fringe benefit of real property or tangible or intangible real property of a kind normally held for investment that is transferred to your employee. Hrblockfree com 5. Hrblockfree com Tips Tips that your employee receives from customers are generally subject to social security and Medicare withholding. Hrblockfree com Your employee must report cash tips to you by the 10th of the month after the month that the tips are received. Hrblockfree com The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. Hrblockfree com Both directly and indirectly tipped employees must report tips to you. Hrblockfree com The report should not include tips that the employee paid out to other employees. Hrblockfree com No report is required for months when tips are less than $20. Hrblockfree com Your employees report tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. Hrblockfree com They may also use Form 4070A, Employee's Daily Record of Tips, to keep a record of their tips. Hrblockfree com Both forms are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer, available at IRS. Hrblockfree com gov. Hrblockfree com The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period that the report covers, and The total tips received during the month or period. Hrblockfree com You are permitted to establish a system for electronic tip reporting by employees. Hrblockfree com See Regulations section 31. Hrblockfree com 6053-1(d). Hrblockfree com Collecting taxes on tips. Hrblockfree com   You must collect the employee social security and Medicare taxes on the employee's tips. Hrblockfree com You can also collect these taxes from the employee's wages or from other funds that he or she makes available. Hrblockfree com Stop collecting the employee social security tax when his or her total wages and tips for 2014 reach $117,000. Hrblockfree com Collect the employee Medicare tax for the whole year on all wages and tips. Hrblockfree com   You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the wage base limit. Hrblockfree com You are responsible for the employer Medicare tax for the whole year on all wages and tips. Hrblockfree com File Form 941-SS (or Form 944) to report withholding and employer taxes on tips. Hrblockfree com The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. Hrblockfree com Ordering rule. Hrblockfree com   If, by the 10th of the month after the month you received an employee's report on tips, you do not have enough employee funds available to deduct the employee social security and Medicare tax on tips, you no longer have to collect it and are not liable for it. Hrblockfree com Reporting tips. Hrblockfree com   Report tips and any collected and uncollected social security in boxes 1, 5, 7, and 12 on Forms W-2AS, W-2CM, W-2GU, or W-2VI and on Form 941-SS, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). Hrblockfree com Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. Hrblockfree com Report an adjustment on Form 941-SS, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. Hrblockfree com The table in section 12 shows how tips are treated for FUTA tax purposes. Hrblockfree com   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. Hrblockfree com See Revenue Ruling 2012-18, 2012-26 I. Hrblockfree com R. Hrblockfree com B. Hrblockfree com 1032, available at www. Hrblockfree com irs. Hrblockfree com gov/irb/2012-26_IRB/ar07. Hrblockfree com html. Hrblockfree com 6. Hrblockfree com Social Security and Medicare Taxes for Farmworkers The tests described below apply only to services that are defined as agricultural labor (farmwork). Hrblockfree com In general, you are an employer of farmworkers if your employees: Raise or harvest agricultural or horticultural products on your farm (including the raising and feeding of livestock); Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment; Provide services relating to salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor); Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity); or Do work for you related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. Hrblockfree com For this purpose, the term “farm” includes stock, dairy, poultry, fruit, fur-bearing animal, and truck farms, as well as plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards. Hrblockfree com Farmwork does not include reselling activities that do not involve any substantial activity of raising agricultural or horticultural commodities, such as a retail store or a greenhouse used primarily for display or storage. Hrblockfree com A “share farmer” working for you is not your employee. Hrblockfree com However, the share farmer may be subject to self-employment tax. Hrblockfree com In general, share farming is an arrangement in which certain commodity products are shared between the farmer and the owner (or tenant) of the land. Hrblockfree com For details, see Regulations section 31. Hrblockfree com 3121(b)(16)-1. Hrblockfree com The $150 Test or the $2,500 Test All cash wages that you pay to any employee for farmwork are subject to social security and Medicare taxes if either of the following two tests is met. Hrblockfree com You pay cash wages to the employee of $150 or more in a year (count all cash wages paid on a time, piecework, or other basis) for farmwork. Hrblockfree com The $150 test applies separately to each farmworker that you employ. Hrblockfree com If you employ a family of workers, each member is treated separately. Hrblockfree com Do not count wages paid by other employers. Hrblockfree com The total that you pay for farmwork (cash and noncash) to all of your employees is $2,500 or more during the year. Hrblockfree com Exceptions. Hrblockfree com   The $150 and $2,500 tests do not apply to wages that you pay to a farmworker who receives less than $150 in annual cash wages and the wages are not subject to social security and Medicare taxes even if you pay $2,500 or more in that year to all of your farmworkers if the farmworker: Is employed in agriculture as a hand-harvest laborer, Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment, Commutes daily from his or her home to the farm, and Had been employed in agriculture less than 13 weeks in the preceding calendar year. Hrblockfree com   Amounts that you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages that you pay to other farmworkers are subject to social security and Medicare taxes. Hrblockfree com 7. Hrblockfree com How To Figure Social Security and Medicare Taxes The tax rate for social security is 6. Hrblockfree com 2% (amount withheld) each for the employer and employee (12. Hrblockfree com 4% total). Hrblockfree com The social security wage base limit is $117,000. Hrblockfree com The tax rate for Medicare is 1. Hrblockfree com 45% (amount withheld) each for the employee and employer (2. Hrblockfree com 9% total). Hrblockfree com There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax. Hrblockfree com Multiply each wage payment by these percentages to figure the tax to withhold from employees. Hrblockfree com Employers report both the employee and employer shares on Forms 941-SS, 944, or Form 943 (farm employment). Hrblockfree com See section 5 for information on tips. Hrblockfree com Additional Medicare Tax withholding. Hrblockfree com   In addition to withholding Medicare tax at 1. Hrblockfree com 45%, you must withhold a 0. Hrblockfree com 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Hrblockfree com You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Hrblockfree com Additional Medicare Tax is only imposed on the employee. Hrblockfree com There is no employer share of Additional Medicare Tax. Hrblockfree com All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Hrblockfree com   For more information on what wages are subject to Medicare tax, see the chart Special Rules for Various Types of Employment and Payments in section 12. Hrblockfree com For more information on Additional Medicare Tax, visit IRS. Hrblockfree com gov and enter “Additional Medicare Tax” in the search box. Hrblockfree com Deducting the tax. Hrblockfree com   Deduct the employee tax from each wage payment. Hrblockfree com If you are not sure that the wages that you pay to a farmworker during the year will be taxable, you may either deduct the tax when you make the payments or wait until the $2,500 test or the $150 test explained in section 6 has been met. Hrblockfree com Employee's portion of taxes paid by employer. Hrblockfree com   If you pay your employee's social security and Medicare taxes without deducting them from the employee's pay, you must include the amount of the payments in the employee's wages for social security and Medicare taxes. Hrblockfree com This increase in the employee's wage payment for your payment of the employee's social security and Medicare taxes is also subject to employee social security and Medicare taxes. Hrblockfree com This again increases the amount of the additional taxes that you must pay. Hrblockfree com Household and agricultural employers. Hrblockfree com   This discussion does not apply to household and agricultural employers. Hrblockfree com If you pay a household or agricultural employee's social security and Medicare taxes, these payments must be included in the employee's wages. Hrblockfree com However, this wage increase due to the tax payments is not subject to social security or Medicare taxes as discussed in this section. Hrblockfree com See Publication 15-A for details. Hrblockfree com Sick pay payments. Hrblockfree com   Social security and Medicare taxes apply to most payments of sick pay, including payments made by third parties such as insurance companies. Hrblockfree com For details on third-party payers of sick pay, see Publication 15-A. Hrblockfree com 8. Hrblockfree com Depositing Taxes You must deposit social security and Medicare taxes if your tax liability (Form 941-SS, line 10; Form 944, line 7; or Form 943, line 11) is $2,500 or more for the tax return period. Hrblockfree com You must make the deposit by electronic funds transfer. Hrblockfree com For more information about electronic funds transfers, see How To Deposit , later in this section. Hrblockfree com Payment with Return $2,500 rule. Hrblockfree com   Instead of making deposits during the current quarter, you can pay your total Form 941-SS tax liability when you timely file Form 941-SS if: Your total Form 941-SS tax liability for either the current quarter or the preceding quarter is less than $2,500 and You do not incur a $100,000 next-day deposit obligation during the current quarter. Hrblockfree com   If you are not sure your total liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit penalties. Hrblockfree com Employers who have been notified to file Form 944 can pay their tax liability due for the fourth quarter with Form 944, if their fourth quarter tax liability is less than $2,500. Hrblockfree com Employers must have deposited any tax liability due for the first, second, and third quarters, according to the deposit rules, in order to avoid failure-to-deposit penalties for deposits due during those quarters. Hrblockfree com Only monthly schedule depositors are allowed to make an Accuracy of Deposits Rule payment with the return. Hrblockfree com Semiweekly schedule depositors must timely deposit the amount. Hrblockfree com See Accuracy of Deposits Rule and How To Deposit, later in this section. Hrblockfree com When To Deposit Under the rules discussed below, the only difference between farm and nonfarm workers' employment tax deposit rules is the lookback period. Hrblockfree com Therefore, farm and nonfarm workers are discussed together except where noted. Hrblockfree com Depending on your total taxes reported during a lookback period (discussed later), you are either a monthly schedule depositor or a semiweekly schedule depositor. Hrblockfree com The terms “monthly schedule depositor” and “semiweekly schedule depositor” do not refer to how often you pay your employees or how often you are required to make deposits. Hrblockfree com The terms identify which set of rules that you must follow when a tax liability arises (for example, when you have a payday). Hrblockfree com You will need to determine your deposit schedule for a calendar year based on the total employment taxes reported on Forms 941-SS, line 10; Form 944, line 7; or Form 943, line 9, for your lookback period (defined below). Hrblockfree com If you filed both Forms 941-SS and 941 during the lookback period, combine the tax liabilities for these returns for purposes of determining your deposit schedule. Hrblockfree com Determine your deposit schedule for Form 943 separately from Forms 941-SS and 941. Hrblockfree com Lookback period for employers of nonfarm workers. Hrblockfree com   The lookback period for Form 941-SS (or Form 941) consists of four quarters beginning July 1 of the second preceding year and ending June 30 of the prior year. Hrblockfree com These four quarters are your lookback period even if you did not report any taxes for any of the quarters. Hrblockfree com For 2014, the lookback period is July 1, 2012, through June 30, 2013. Hrblockfree com    Table 1. Hrblockfree com Lookback Period for Calendar Year 2014 Lookback Period July 1, 2012 Oct. Hrblockfree com 1, 2012 Jan. Hrblockfree com 1, 2013 Apr. Hrblockfree com 1, 2013 through through through through Sep. Hrblockfree com 30, 2012 Dec. Hrblockfree com 31, 2012 Mar. Hrblockfree com 31, 2013 June 30, 2013    The lookback period for Form 944 is the second calendar year preceding the current calendar year. Hrblockfree com For example, the lookback period for calendar year 2014 is calendar year 2012. Hrblockfree com In addition, for employers who filed Form 944 for 2012 or for 2013 and will file Form 941-SS (or Form 941) for 2014, the lookback period for 2014 is the second calendar year preceding the current calendar year, that is, 2012. Hrblockfree com Lookback period for employers of farmworkers. Hrblockfree com   The lookback period for Form 943 is the second calendar year preceding the current calendar year. Hrblockfree com The lookback period for calendar year 2014 is calendar year 2012. Hrblockfree com Adjustments to lookback period taxes. Hrblockfree com   To determine your taxes for the lookback period, use only the tax that you reported on the original returns (Forms 941-SS, 943, or 944). Hrblockfree com Do not include any adjustments shown on Form 941-X, 943-X, or 944-X. Hrblockfree com Example. Hrblockfree com   An employer originally reported total taxes of $45,000 for the lookback period. Hrblockfree com The employer discovered during January 2014 that the tax reported during the lookback period was understated by $10,000 and corrected this error by filing Form 941-X. Hrblockfree com The employer is a monthly schedule depositor for 2014 because the lookback period tax liabilities are based on the amounts originally reported, and they were $50,000 or less. Hrblockfree com Deposit Period The term “deposit period” refers to the period during which tax liabilities are accumulated for each required deposit due date. Hrblockfree com For monthly schedule depositors, the deposit period is a calendar month. Hrblockfree com The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through Tuesday. Hrblockfree com Monthly Deposit Schedule If your total tax reported for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. Hrblockfree com You must deposit taxes on wage payments made during a calendar month by the 15th day of the following month. Hrblockfree com New employers. Hrblockfree com   Your tax liability for any quarter in the lookback period before the date you started or acquired your business is considered to be zero. Hrblockfree com Therefore, you are a monthly schedule depositor for the first calendar year of your business (but see the $100,000 Next-Day Deposit Rule , later in this section). Hrblockfree com Semiweekly Deposit Schedule If your total tax reported for the lookback period is more than $50,000, you are a semiweekly schedule depositor for the current year. Hrblockfree com If you are a semiweekly schedule depositor, you must deposit on Wednesday and/or Friday, depending on what day of the week that you make wage payments, as follows. Hrblockfree com Deposit taxes on wage payments made on Wednesday, Thursday, and/or Friday by the following Wednesday. Hrblockfree com Deposit taxes on wage payments made on Saturday, Sunday, Monday, and/or Tuesday by the following Friday. Hrblockfree com Semiweekly depositors are generally not required to deposit twice a week if their payments were in the same semiweekly period unless the $100,000 Next-Day Deposit Rule , discussed later in this section, applies. Hrblockfree com For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 on the following Wednesday. Hrblockfree com If you made no additional payments on Saturday through Tuesday, no deposit is due on Friday. Hrblockfree com Semiweekly deposit period spanning two quarters. Hrblockfree com   If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate liabilities. Hrblockfree com Example. Hrblockfree com   If you have a pay date on Monday, March 31, 2014 (first quarter), and another pay date on Tuesday, April 1, 2014 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Hrblockfree com Both deposits will be due on Friday, April 4, 2014 (3 business days from the end of the semiweekly deposit period). Hrblockfree com Examples of Monthly and Semiweekly Schedules Employers of nonfarm workers. Hrblockfree com   Rose Co. Hrblockfree com reported Form 941-SS taxes as follows: 2013 Lookback Period 3rd Quarter 2011 $12,000 4th Quarter 2011 12,000 1st Quarter 2012 12,000 2nd Quarter 2012 12,000   $48,000 2014 Lookback Period 3rd Quarter 2012 $12,000 4th Quarter 2012 12,000 1st Quarter 2013 12,000 2nd Quarter 2013 15,000   $51,000 Rose Co. Hrblockfree com is a monthly schedule depositor for 2013 because its taxes for the four quarters in its lookback period ($48,000 for the 3rd quarter of 2011 through the 2nd quarter of 2012) were not more than $50,000. Hrblockfree com However, for 2014, Rose Co. Hrblockfree com is a semiweekly schedule depositor because the total taxes for the four quarters in its lookback period ($51,000 for the 3rd quarter of 2012 through the 2nd quarter of 2013) exceeded $50,000. Hrblockfree com Employers of farmworkers. Hrblockfree com   Red Co. Hrblockfree com reported taxes on its 2012 Form 943, line 9, of $48,000. Hrblockfree com On its 2013 Form 943, line 11, it reported taxes of $60,000. Hrblockfree com   Red Co. Hrblockfree com is a monthly schedule depositor for 2014 because its taxes for its lookback period ($48,000 for calendar year 2012) were not more than $50,000. Hrblockfree com However, for 2015, Red Co. Hrblockfree com is a semiweekly schedule depositor because the total taxes for its lookback period ($60,000 for calendar year 2013) exceeded $50,000. Hrblockfree com New agricultural employers. Hrblockfree com   New agricultural employers filing Form 943 are monthly schedule depositors for the first and second calendar years of their business because their taxes for the lookback period (2 years) are considered to be zero. Hrblockfree com However, see the $100,000 Next-Day Deposit Rule , later in this section. Hrblockfree com Deposits on Business Days Only If a deposit due date falls on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. Hrblockfree com A business day is any day other than a Saturday, Sunday, or legal holiday. Hrblockfree com For example, if a deposit is required to be made on Friday, but Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business day). Hrblockfree com Semiweekly schedule depositors have at least 3 business days to make a deposit. Hrblockfree com If any of the 3 weekdays after the end of a semiweekly period is a legal holiday, you will have an additional day for each day that is a legal holiday to make the required deposit. Hrblockfree com For example, if a semiweekly schedule depositor accumulated taxes for payments made on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit). Hrblockfree com Legal holiday. Hrblockfree com   The term “legal holiday” means any legal holiday in the District of Columbia. Hrblockfree com Legal holidays for 2014 are listed below. Hrblockfree com January 1—New Year's Day January 20—Birthday of Martin Luther King, Jr. Hrblockfree com February 17—Washington's Birthday April 16—District of Columbia Emancipation Day May 26—Memorial Day July 4—Independence Day September 1—Labor Day October 13—Columbus Day November 11—Veterans Day November 27—Thanksgiving Day December 25—Christmas Day Application of Monthly and Semiweekly Schedules The following examples illustrate the procedure for determining the deposit date under the two different deposit schedules. Hrblockfree com Monthly schedule example. Hrblockfree com   Spruce Co. Hrblockfree com is a monthly schedule depositor with seasonal employees. Hrblockfree com It paid wages each Friday during August but did not pay any wages during September. Hrblockfree com Under the monthly deposit schedule, Spruce Co. Hrblockfree com must deposit the combined tax liabilities for the four August paydays by September 15. Hrblockfree com Spruce Co. Hrblockfree com does not have a deposit requirement for September (due by October 15) because no wages were paid and, therefore, it did not have a tax liability for September. Hrblockfree com Semiweekly schedule example. Hrblockfree com   Green, Inc. Hrblockfree com is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Hrblockfree com Although Green, Inc. Hrblockfree com , has a semiweekly deposit schedule, it will deposit just once a month because it pays wages only once a month. Hrblockfree com The deposit, however, will be made under the semiweekly deposit schedule as follows: Green, Inc. Hrblockfree com ’s tax liability for the April 25, 2014 (Friday), payday must be deposited by April 30, 2014 (Wednesday). Hrblockfree com Under the semiweekly deposit schedule, liabilities for wages paid on Wednesday through Friday must be deposited by the following Wednesday. Hrblockfree com $100,000 Next-Day Deposit Rule If you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit by the close of the next business day, whether you are a monthly or a semiweekly schedule depositor. Hrblockfree com For purposes of the $100,000 rule, do not continue accumulating taxes after the end of a deposit period. Hrblockfree com For example, if a semiweekly schedule depositor has accumulated taxes of $95,000 on Tuesday and $10,000 on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Hrblockfree com Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the following Wednesday. Hrblockfree com However, once you accumulate at least $100,000 in a deposit period, stop accumulating at the end of that day and begin to accumulate anew on the next day. Hrblockfree com For example, Fir Co. Hrblockfree com is a semiweekly schedule depositor. Hrblockfree com On Monday, Fir Co. Hrblockfree com accumulates taxes of $110,000 and must deposit on Tuesday, the next business day. Hrblockfree com On Tuesday, Fir Co. Hrblockfree com accumulates additional taxes of $30,000. Hrblockfree com Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. Hrblockfree com does not have to deposit the $30,000 until Friday (following the semiweekly deposit schedule). Hrblockfree com If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day during a month, you become a semiweekly schedule depositor on the next day and remain so for the remainder of the calendar year and for the following calendar year. Hrblockfree com Example. Hrblockfree com   Elm, Inc. Hrblockfree com started its business on May 1, 2014. Hrblockfree com On May 8, it paid wages for the first time and accumulated a tax liability of $40,000. Hrblockfree com On Friday, May 9, Elm, Inc. Hrblockfree com paid wages and accumulated a liability of $60,000, making its accumulated Form 941-SS tax liability total $100,000. Hrblockfree com Elm, Inc. Hrblockfree com must deposit $100,000 by Monday, May 12, the next business day. Hrblockfree com Because this was the first year of its business, the tax liability for its lookback period is considered to be zero, and it would be a monthly schedule depositor based on the lookback rules. Hrblockfree com However, because Elm, Inc. Hrblockfree com accumulated $100,000 on May 9, it became a semiweekly schedule depositor on May 10. Hrblockfree com It will be a semiweekly schedule depositor for the remainder of 2014 and for 2015. Hrblockfree com Accuracy of Deposits Rule You are required to deposit 100% of your tax liability on or before the deposit due date. Hrblockfree com However, penalties will not be applied for depositing less than 100% if both of the following conditions are met. Hrblockfree com Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited, and The deposit shortfall is paid or deposited by the shortfall makeup date as described below. Hrblockfree com Makeup date for deposit shortfall: Monthly schedule depositor. Hrblockfree com Deposit or pay the shortfall by the due date of your Form 941-SS, 944, or 943 for the period in which the shortfall occurred. Hrblockfree com You may pay the shortfall with your return even if the amount is $2,500 or more. Hrblockfree com Semiweekly schedule depositor. Hrblockfree com Deposit by the earlier of: The first Wednesday or Friday (whichever comes first) that comes on or after the 15th of the month following the month in which the shortfall occurred, or The return due date for the period in which the shortfall occurred. Hrblockfree com For example, if a semiweekly schedule depositor filing Form 941-SS has a deposit shortfall during July 2014, the shortfall makeup date is August 15, 2014 (Friday). Hrblockfree com However, if the shortfall occurred on the required April 2 (Wednesday), deposit date for a March 28 (Friday) pay date, the return due date for the March 28 pay date (April 30) would come before the May 16 (Friday) shortfall makeup date. Hrblockfree com In this case, the shortfall must be deposited by April 30, 2014. Hrblockfree com Employers of Both Farm and Nonfarm Workers If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941-SS or 944 taxes). Hrblockfree com Form 943 taxes and Form 941-SS (or Form 944) taxes are not combined for purposes of applying any of the deposit rules. Hrblockfree com If a deposit is due, deposit the Form 941-SS (or Form 944) taxes and Form 943 taxes separately, as discussed next. Hrblockfree com How To Deposit You must deposit employment taxes by electronic funds transfer. Hrblockfree com See Payment with Return , earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being deposited. Hrblockfree com Electronic deposit requirement. Hrblockfree com   You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Hrblockfree com Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). Hrblockfree com If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Hrblockfree com   EFTPS is a free service provided by the Department of the Treasury. Hrblockfree com To get more information or to enroll in EFTPS, call 1-800-555-4477 (U. Hrblockfree com S. Hrblockfree com Virgin Islands only) or 303-967-5916 (toll call). Hrblockfree com You can also visit the EFTPS website at www. Hrblockfree com eftps. Hrblockfree com gov. Hrblockfree com Additional information about EFTPS is also available in Publication 966. Hrblockfree com When you receive your EIN. Hrblockfree com   If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in EFTPS. Hrblockfree com You will receive information about Express Enrollment in your Employer Identification Number (EIN) Package and an additional mailing containing your EFTPS personal identification number (PIN) and instructions for activating your PIN. Hrblockfree com Follow the steps in your “How to Activate Your Enrollment” brochure to activate your enrollment and begin making your payroll tax deposits. Hrblockfree com If you outsource any of your payroll and related tax duties to a third party payer, such as a payroll service provider or reporting agent, be sure to tell them about your EFTPS enrollment. Hrblockfree com Deposit record. Hrblockfree com   For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. Hrblockfree com The number can be used as a receipt or to trace the payment. Hrblockfree com Depositing on time. Hrblockfree com   For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p. Hrblockfree com m. Hrblockfree com Eastern time the day before the date the deposit is due. Hrblockfree com If you use a third party to make deposits on your behalf, they may have different cutoff times. Hrblockfree com Same-day payment option. Hrblockfree com   If you fail to initiate a deposit transaction on EFTPS by 8 p. Hrblockfree com m. Hrblockfree com Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). Hrblockfree com To use the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Hrblockfree com Please check with your financial institution regarding availability, deadlines, and costs. Hrblockfree com Your financial institution may charge you a fee for payments made this way. Hrblockfree com To learn more about the information you will need to provide your financial institution to make a same-day wire payment, please visit www. Hrblockfree com eftps. Hrblockfree com gov to download the Same-Day Payment Worksheet. Hrblockfree com How to claim credit for overpayments. Hrblockfree com   If you deposited more than the right amount of taxes for a tax period, you can choose on Form 941-SS, 941, 944, or 943 for that tax period to have the overpayment refunded or applied as a credit to your next return. Hrblockfree com Do not ask EFTPS to request a refund from the IRS for you. Hrblockfree com Deposit Penalties Penalties may apply if you do not make required deposits on time or if you make deposits of less than the required amount. Hrblockfree com The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. Hrblockfree com The IRS may also waive penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax return. Hrblockfree com For amounts not properly or timely deposited, the penalty rates are as follows. Hrblockfree com 2% - Deposits made 1 to 5 days late. Hrblockfree com 5% - Deposits made 6 to 15 days late. Hrblockfree com 10% - Deposits made 16 or more days late. Hrblockfree com Also applies to amounts paid within 10 days of the date of the first notice that the IRS sent asking for the tax due. Hrblockfree com 10% - Amounts (that should have been deposited) paid directly to the IRS or paid with your tax return (but see Payment with Return , earlier in this section, for exceptions). Hrblockfree com 15% - Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier. Hrblockfree com Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. Hrblockfree com Special rule for former Form 944 filers. Hrblockfree com    If you filed Form 944 for the prior year and must file Forms 941-SS for the current year because your employment tax liability for the prior year exceeded the Form 944 eligibility requirement ($1,000 or less), the failure-to-deposit penalty will not apply to a late deposit of employment taxes for the first month of the current year if the taxes are deposited in full by March 15 of the current year. Hrblockfree com Order in which deposits are applied. Hrblockfree com   Deposits generally are applied to the most recent tax liability within the return period (quarter or year). Hrblockfree com However, if you receive a failure-to-deposit penalty notice, you may designate how your payment is to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Hrblockfree com Follow the instructions on the penalty notice that you received. Hrblockfree com For more information on designating deposits, see Revenue Procedure 2001-58. Hrblockfree com You can find Revenue Procedure 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at www. Hrblockfree com irs. Hrblockfree com gov/pub/irs-irbs/irb01-50. Hrblockfree com pdf. Hrblockfree com Example. Hrblockfree com Cedar, Inc. Hrblockfree com is required to make a deposit of $1,000 on July 15 and $1,500 on August 15. Hrblockfree com It does not make the deposit on July 15. Hrblockfree com On August 15, Cedar, Inc. Hrblockfree com deposits $2,000. Hrblockfree com Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the August 15 deposit and the remaining $500 is applied to the July deposit. Hrblockfree com Accordingly, $500 of the July 15 liability remains undeposited. Hrblockfree com The penalty on this underdeposit will apply as explained earlier. Hrblockfree com Trust fund recovery penalty. Hrblockfree com   If federal income, social security, or Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. Hrblockfree com The penalty is the full amount of the unpaid trust fund tax. Hrblockfree com This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business. Hrblockfree com   The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. Hrblockfree com   A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship, or any other person or entity that is responsible for collecting, accounting for, and paying over trust fund taxes. Hrblockfree com A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds. Hrblockfree com    Willfully means voluntarily, consciously, and intentionally. Hrblockfree com A responsible person acts willfully if the person knows the required actions of collecting, accounting for or paying over trust fund taxes are not taking place, or recklessly disregards obvious and known risks to the government's right to receive trust fund taxes. Hrblockfree com “Averaged” failure-to-deposit penalty. Hrblockfree com   The IRS may assess an “averaged” failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 941-SS, line 14, when your tax liability shown on Form 941-SS, line 10, was $2,500 or more. Hrblockfree com IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 941-SS, line 10, was $2,500 or more and you did any of the following. Hrblockfree com Completed Form 941-SS, line 14, instead of Schedule B (Form 941). Hrblockfree com Failed to attach a properly completed Schedule B (Form 941). Hrblockfree com Completed Schedule B (Form 941) incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered spaces. Hrblockfree com   The IRS figures the penalty by allocating your total tax liability shown on Form 941-SS, line 10, equally throughout the tax period. Hrblockfree com Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax liabilities. Hrblockfree com   You can avoid the penalty by reviewing your return before filing it. Hrblockfree com Follow these steps before filing your Form 941-SS. Hrblockfree com If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 941-SS, line 14. Hrblockfree com If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates you paid your employees. Hrblockfree com Verify that your total liability shown on Form 941-SS, line 14, or the bottom of Schedule B (Form 941) equals your tax liability shown on Form 941-SS,  line 10. Hrblockfree com Do not show negative amounts on Form 941-SS, line 14, or Schedule B (Form 941). Hrblockfree com For prior period errors, do not adjust your tax liabilities reported on your current Form 941-SS, line 14, or on Schedule B (Form 941). Hrblockfree com Instead, file an adjusted return (Form 941-X (if you are adjusting a previously filed Form 941-SS) or Form 944-X (if you are adjusting a previously filed Form 944-SS or 944)) if you are also adjusting your tax liability. Hrblockfree com If you are only adjusting your deposits in response to a failure-to-deposit penalty notice, see the Instructions for Schedule B (Form 941) (if you previously filed Form 941-SS) or the Instructions for Form 944-X (if you previously filed Form 944-SS or 944). Hrblockfree com If you filed Form 944 for 2013 and line 7 was $2,500 or more, you were required to complete Form 944, lines 13a–13m, or attach Form 945-A, Annual Record of Federal Tax Liability. Hrblockfree com If you failed to complete lines 13a–13m, or failed to attach Form 945-A, whichever was required, IRS may assess an “averaged” failure-to-deposit (FTD) penalty. Hrblockfree com 9. Hrblockfree com Employer's Returns General instructions. Hrblockfree com   File Forms 941-SS (or Form 944) for nonfarm workers and Form 943 for farmworkers. Hrblockfree com (U. Hrblockfree com S. Hrblockfree com Virgin Islands employers may be required to file Form 940 for the combined wages of nonfarm workers and farmworkers. Hrblockfree com ) Employers with employees subject to U. Hrblockfree com S. Hrblockfree com income tax withholding. Hrblockfree com   If you have both employees who are subject to U. Hrblockfree com S. Hrblockfree com income tax withholding and employees who are not subject to U. Hrblockfree com S. Hrblockfree com income tax withholding, you must file only Form 941 (or Form 944) and include all your employees’ wages on that form. Hrblockfree com Nonfarm employers. Hrblockfree com   File Form 941-SS for the calendar quarter in which you first pay wages for nonfarm workers and for each quarter thereafter unless you are a seasonal employer or file a final return. Hrblockfree com Due dates for each quarter of the calendar year are as follows. Hrblockfree com Quarter Due Jan. Hrblockfree com , Feb. Hrblockfree com , Mar. Hrblockfree com Apr. Hrblockfree com 30 Apr. Hrblockfree com , May, June July 31 July, Aug. Hrblockfree com , Sept. Hrblockfree com Oct. Hrblockfree com 31 Oct. Hrblockfree com , Nov. Hrblockfree com , Dec. Hrblockfree com Jan. Hrblockfree com 31   However, if you deposited all taxes when due for the quarter, you have 10 additional days from the due dates to file the return. Hrblockfree com If the due date for filing your return falls on a Saturday, Sunday, or legal holiday, you may file on the next business day. Hrblockfree com   If you closed your business or stopped paying wages and do not have to file returns in the future, check the box on line 15 of your final Form 941-SS and show the date final wages were paid. Hrblockfree com Form 944. Hrblockfree com   If IRS notified you to file Form 944, file your 2013 Form 944 by January 31, 2014, or by February 10, 2014 (if you deposited all taxes when due). Hrblockfree com Household employers reporting social security and Medicare taxes. Hrblockfree com   If you are a sole proprietor and file Forms 941-SS (or Form 944) for business employees, you may include taxes for household employees on your Forms 941-SS (or Form 944). Hrblockfree com Otherwise, report social security and Medicare taxes for household employees on Schedule H (Form 1040), Household Employment Taxes. Hrblockfree com See Publication 926, Household Employer's Tax Guide, for more information. Hrblockfree com Employers of farmworkers. Hrblockfree com   Every employer of farmworkers must file a Form 943 for each calendar year beginning with the first year the employer pays $2,500 or more for farmwork or employs a farmworker who meets the $150 test described in section 6. Hrblockfree com   File a Form 943 each year for all taxable wages paid for farmwork. Hrblockfree com You may report household workers in a private home on a farm operated for profit on Form 943. Hrblockfree com Do not report wages for farmworkers on Form 941-SS or 944. Hrblockfree com   Send Form 943 to the IRS by January 31 of the following year. Hrblockfree com Send it with payment of any taxes due that you are not required to deposit. Hrblockfree com If you deposited all taxes when due, you have 10 additional days to file. Hrblockfree com Penalties. Hrblockfree com   For each whole or part month that a return is not filed when required (disregarding any extensions of the filing deadline), there is a failure-to-file penalty of 5% of the unpaid tax due with that return. Hrblockfree com The maximum penalty is generally 25% of the tax due. Hrblockfree com Also, for each whole or part month that the tax is paid late (disregarding any extensions of the payment deadline), there is a failure-to-pay penalty of 0. Hrblockfree com 5% per month of the amount of tax. Hrblockfree com For individual filers only, the failure-to-pay penalty is reduced from 0. Hrblockfree com 5% per month to 0. Hrblockfree com 25% per month if an installment agreement is in effect. Hrblockfree com You must have filed your return on or before the due date of the return to qualify for the reduced penalty. Hrblockfree com The maximum amount of the failure-to-pay penalty is also 25% of the tax due. Hrblockfree com If both penalties apply in any month, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty. Hrblockfree com The penalties will not be charged if you have a reasonable cause for failing to file or pay. Hrblockfree com If you receive a penalty notice, you can provide an explanation of why you believe reasonable cause exists. Hrblockfree com Reporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Current Period Adjustments Make current period adjustments for fractions of cents, sick pay, tips, and group-term life insurance on your Form 941-SS, 944, or 943. Hrblockfree com See the Instructions for Form 941-SS, Instructions for Form 944, or Instructions for Form 943 for information on how to report these adjustments. Hrblockfree com Prior Period Adjustments Forms for prior period adjustments. Hrblockfree com   Use Form 941-X or Form 944-X to make a correction after you discover an error on a previously filed Form 941 or Form 944. Hrblockfree com There are also Forms 943-X, 945-X, and CT-1X to report corrections on the corresponding returns. Hrblockfree com Form 941-X and Form 944-X also replace Form 843, Claim for Refund and Request for Abatement, for employers to request a refund or abatement of overreported employment taxes. Hrblockfree com Continue to use Form 843 when requesting a refund or abatement of assessed interest or penalties. Hrblockfree com See Revenue Ruling 2009-39, 2009-52 I. Hrblockfree com R. Hrblockfree com B. Hrblockfree com 951, for examples of how the interest-free adjustment and claim for refund rules apply in 10 different situations. Hrblockfree com You can find Revenue Ruling 2009-39, at www. Hrblockfree com irs. Hrblockfree com gov/irb/2009-52_IRB/ar14. Hrblockfree com html. Hrblockfree com Background. Hrblockfree com   Treasury Decision 9405 changed the process for making interest-free adjustments to employment taxes reported on Forms 941-SS, 943, 944-SS, and 944, and for filing a claim for refund of employment taxes. Hrblockfree com Treasury Decision 9405, 2008-32 I. Hrblockfree com R. Hrblockfree com B. Hrblockfree com 293, is available at www. Hrblockfree com irs. Hrblockfree com gov/irb/2008-32_IRB/ar13. Hrblockfree com html. Hrblockfree com You will use the adjustment process if you underreported employment taxes and are making a payment, or if you overreported employment taxes and will be applying the credit to the Form 941-SS, 943, or 944 period during which you file Forms 941-X, 943-X, or 944-X, respectively. Hrblockfree com You will use the claim process if you overreported employment taxes and are requesting a refund or abatement of the overreported amount. Hrblockfree com We use the terms “correct” and “corrections” to include interest-free adjustments under sections 6205 and 6413, and claims for refund and abatement under sections 6402, 6414, and 6404 of the Internal Revenue Code. Hrblockfree com Correcting employment taxes. Hrblockfree com   When you discover an error on a previously filed Form 941-SS, 943, 944-SS, or 944, you must: Correct that error using Form 941-X, Form 943-X, or Form 944-X, File a separate Form 941-X, Form 943-X, or Form 944-X for
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Hrblockfree com 11. Hrblockfree com   Employer-Provided Educational Assistance Table of Contents Introduction Working condition fringe benefit. Hrblockfree com Introduction If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. Hrblockfree com This means your employer should not include those benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. Hrblockfree com This also means that you do not have to include the benefits on your income tax return. Hrblockfree com You cannot use any of the tax-free education expenses paid for by your employer as the basis for any other deduction or credit, including the American opportunity credit and lifetime learning credit. Hrblockfree com Educational assistance program. Hrblockfree com   To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. Hrblockfree com Your employer can tell you whether there is a qualified program where you work. Hrblockfree com Educational assistance benefits. Hrblockfree com   Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. Hrblockfree com Education generally includes any form of instruction or training that improves or develops your capabilities. Hrblockfree com The payments do not have to be for work-related courses or courses that are part of a degree program. Hrblockfree com   Educational assistance benefits do not include payments for the following items. Hrblockfree com Meals, lodging, or transportation. Hrblockfree com Tools or supplies (other than textbooks) that you can keep after completing the course of instruction. Hrblockfree com Courses involving sports, games, or hobbies unless they: Have a reasonable relationship to the business of your employer, or Are required as part of a degree program. Hrblockfree com Benefits over $5,250. Hrblockfree com   If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. Hrblockfree com Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income. Hrblockfree com Working condition fringe benefit. Hrblockfree com    However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer does not have to include them in your wages. Hrblockfree com A working condition fringe benefit is a benefit which, had you paid for it, you could deduct as an employee business expense. Hrblockfree com For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. Hrblockfree com Prev  Up  Next   Home   More Online Publications